Key insights
- Romania's central bank is expected to hold rates amid inflation concerns, potentially adopting a hawkish tone. The market anticipates ECB rate hikes, but Erste predicts a more dovish stance. This divergence in monetary policy expectations, while focused on Europe, introduces a slight bearish signal for US equities as global monetary policy uncertainty can impact risk sentiment.
Investing.com - Economists surveyed by Bloomberg unanimously expect Romania’s central bank to keep its key interest rate unchanged at 6.50% at its meeting on May 15, according to a report from Erste.
The National Bank of Romania is expected to revise its inflation outlook upwards, with the extent of the revision depending on the forecast cut-off date. This should result in a hawkish tone at the press conference early next week, though any forward guidance is likely to be dropped.
Rate hikes are seen as highly unlikely. Tighter liquidity management by sterilizing surplus liquidity at the key rate level via deposit-taking tenders might be an option, though Erste does not believe it would be on the table at the current juncture.
Such a decision is more likely to be triggered by currency weakening concerns rather than another bout of inflationary pressures. The relative interest rate differential versus core and Central and Eastern European markets is factored into the NBR decision-making process.
The market is currently fully pricing in two rate hikes of 25 basis points each by the European Central Bank by September. Erste sees only one hike from the ECB at its June meeting and policy rates unchanged across the CEE region throughout 2026.
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